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CHAPTER 6
Courage and Moral Leadership
Chapter Outline
Moral Leadership Today
Acting Like a Moral Leader
Becoming a Moral Leader
Servant Leadership
Leading with Courage
In the Lead
Denise Ramos and Jennifer Schiavone, ITT
Adam Grant, Wharton School of the University of Pennsylvania
Paula Reid, U.S Secret Service
Michael Woodford, Olympus
Leader’s Self-Insight
Ethical Maturity
Summary and Interpretation
This chapter explores a number of ideas concerning moral leadership and leadership courage.
People want honest and trustworthy leaders. However, the ethical climate in many organizations
is at a low point. Leaders face pressures that challenge their ability to do the right thing—
pressures to cut costs, increase profits, meet the demands of various stakeholders, and look
Ideas about control versus service between leaders and followers are changing and expanding,
reflected in a continuum of leader–follower relationships. The continuum varies from
authoritarian managers to participative managers to stewardship to servant leadership. Leaders
who operate from the principles of stewardship and servant leadership can help build ethical
organizations.
Your Leadership Challenge
After reading this chapter, you should be able to:
• Combine a rational approach to leadership with a concern for people and ethics.
• Understand how leaders set the ethical tone in organizations and recognize the distinction
between ethical and unethical leadership.
Key Terms
Moral leadership: distinguishing right from wrong and doing right, seeking the just, honest, and
good in the practice of leadership.
Preconventional level: the level of personal moral development in which individuals are
egocentric and concerned with receiving external rewards and avoiding punishments.
Conventional level: the level of personal moral development in which people learn to conform
to the expectations of good behavior as defined by colleagues, family, friends, and society.
Postconventional level (sometimes called the principled level): the level of personal moral
development in which leaders are guided by an internalized set of principles universally
recognized as right or wrong.
Introduction
By the time she was shot in the head in an assassination attempt by Taliban gunmen in October
2012, 14-year-old Malala Yousafzai had been a leader in the fight for girls’ education in Pakistan
for more than three years. Yousafzai began writing a blog under a pseudonym for the BBC at the
age of 11, detailing her life under Taliban rule, their control of the Swat Valley, and her
advocacy of education for girls. After the Pakistan military ousted the militants from her region,
Malala Yousafzai’s story illustrates that real leadership has less to do with making use of other
Annotated Lecture/Outline
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Leadership Challenge #1: Combine a rational approach to leadership with a concern for people
and ethics.
I. Moral Leadership Today
The names of once-revered corporations such as AIG, Lehman Brothers, Bear Stearns, and
Countrywide have become synonymous with greed, deceit, arrogance, or lack of moral
conscience. Although the high-profile stories of ethical misconduct in organizations have slowed
a bit, there are plenty of leaders still on the hot seat because of immoral or unethical behavior:
• Brian Dunn of Best Buy and Mark Hurd of Hewlett-Packard both resigned under pressure
A. The Ethical Climate in Business
Leaders face many pressures that challenge their ability to do the right thing. The most
dangerous obstacles for leaders are personal weakness and self-interest rather than full-scale
corruption. Pressures to cut costs, increase profits, meet the demands of vendors or business
partners, and look successful can all contribute to ethical lapses.
New Leader Action Memo: As a leader, you can put ethical values into action and set the
example you want followers to live by. You can resist pressures to act unethically just to avoid
criticism or achieve short-term gains.
Discussion Question #1: What are some pressures you face as a student that challenge your
ability to do the right thing? Do you expect to face more or fewer pressures as a leader? Discuss
what some of these pressures might be.
Notes_________________________________________________________________________
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Leadership Challenge #2: Understand how leaders set the ethical tone in organizations and
recognize the distinction between ethical and unethical leadership.
B. Leaders Set the Ethical Tone
Top leaders in particular are facing closer scrutiny because what goes on at the top sets the
standard for the rest of the organization. In a study of Fortune 100 companies, fully 40
percent were found to have been engaged in activities that could be considered unethical.
In the Lead: Denise Ramos and Jennifer Schiavone, ITT
ITT, a diversified global industrial corporation, was founded in the early twentieth century, but
when the corporation spun off its defense and water businesses in October 2011, it essentially
became a “100-year-old startup,” as chief communications officer Jennifer Schiavone puts it.
Many companies would start building the brand by taking an external approach, but Schiavone’s
team and new CEO Denise Ramos took the opposite approach—building the company’s
reputation from the inside out with a culture of trust, engagement, and integrity.
New Leader Action Memo: Go to Leader’s Self-Insight 6.1 and complete the questions to learn
whether your behavior and decisions suggest the you will be an ethical leader.
Exhibit 6.1: Comparing Unethical Versus Ethical Leadership
Exhibit 6.1 compares ethical and unethical leadership:
• The behaviors listed in column 1 contribute to an organizational climate of trust,
fairness, and doing the right thing.
• Column 2 lists the opposite behaviors, which contribute to a climate ripe for ethical and
legal abuses.
Ethical leaders aren’t preoccupied with their own importance. They keep the focus on
employees, customers, and the greater good rather than taking every opportunity to satisfy
their self-interest, feed their greed, or nourish their egos. Unethical leaders typically pay more
attention to gaining benefits for themselves rather than for the company or the larger society.
Discussion Question #5: If you were in a position as a student similar to Mike McQueary at
Pennsylvania State University, what do you think you would do? Why?
Notes_________________________________________________________________________
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Discussion Question #8: Leaders at several organizations, including Hostess Brands (Twinkies),
Sbarro, and Blockbuster, have gotten significant raises or bonuses shortly before the firms filed
Notes_________________________________________________________________________
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II. Acting Like a Moral Leader
Companies that get into ethical trouble typically have top leaders who make quarterly earnings
and the share price their primary purpose of business and the most important measure of
individual and organizational success. When leaders forget that business is about values and not
New Leader Action Memo: As a leader, you can drive fear out of the organization so that
followers feel comfortable reporting problems or ethical abuses. You can establish clear ethics
policies, reward ethical conduct, and show zero tolerance for violations.
Despite the corporate realities of greed, competition, and the drive to achieve goals and profits,
leaders can act based on moral values and encourage others to develop and use moral values and
Exhibit 6.2: How to Act Like a Moral Leader
Exhibit 6.2 lists some specific ways leaders act to build an environment that allows and
encourages people to behave ethically. Leaders create organizational systems and policies that
support ethical behavior, such as creating open-door policies that encourage people to talk about
Exhibit 6.3: More Than Wheels Core Value
Exhibit 6.3 lists the core values for More Than Wheels, which has a mission “To help struggling
individuals & families break the cycle of poor financial decision making by using the car buying
process to catalyze lasting change, financial stability and control.” Leaders articulate and uphold
high ethical standards, and they behave morally even if they think no one is looking.
Discussion Question #9: Do you agree that it is important for leaders to do the right thing even
if no one will ever know about it? Why or why not?
Notes_________________________________________________________________________
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Leadership Challenge #4: Know and use mechanisms that enhance an ethical organizational
culture.
III. Becoming a Moral Leader
All leadership practices can be used for good or evil and thus have a moral dimension. Leaders
choose whether to act from selfishness and greed to diminish others, or to behave in ways that
Leadership Challenge #3: Recognize your own stage of moral development and ways to
accelerate your moral maturation.
Leaders most often know what is right; the question becomes how they choose to act on it and
Exhibit 6.4: Three Levels of Personal Moral Development
Exhibit 6.4 shows a simplified illustration of one model of personal moral development.
At the preconventional level, individuals are egocentric and concerned with receiving external
rewards and avoiding punishments. They obey authority and follow rules to avoid detrimental
At level two, the conventional level, people learn to conform to the expectations of good
behavior as defined by colleagues, family, friends, and society. People at this level follow the
rules, norms, and values in the corporate culture. If the rules are to not steal, cheat, make false
At the postconventional level, sometimes called the principled level, leaders are guided by an
internalized set of principles universally recognized as just and right. People at this level may
even disobey rules or laws that violate these principles. These internalized values become more
important than the expectations of other people in the organization or community.
Discussion Question #2: If most adults are at a conventional level of moral development, what
does this mean for their potential for moral leadership?
Notes_________________________________________________________________________
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IV. Servant Leadership
Much of the thinking about leadership today implies that moral leadership involves turning
Exhibit 6.5: Changing Leader Focus from Self to Others
Exhibit 6.5 illustrates a continuum of leadership thinking and practice:
• In the first stage, subordinates are passive—not expected to think for themselves but
simply to do as they are told.
A. Authoritarian Management
The traditional understanding of leadership is that leaders are good managers who direct and
control their people. Followers are obedient subordinates who follow orders. Power, purpose,
and privilege reside with those at the top of the organization. Organizational stability and
B. Participative Management
Since the 1980s, many organizations have made efforts to actively involve employees.
Leaders have increased employee participation through employee suggestion programs,
participation groups, and quality circles. Studies indicate that around 70 percent of the largest
Discussion Question #7: If it is immoral to prevent those around you from growing to their
fullest potential, are you being moral?
Notes_________________________________________________________________________
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Leadership Challenge #5: Apply the principles of stewardship and servant leadership.
C. Stewardship
Stewardship means that leaders are guardians and curators of organizational resources and
values and they place the long-term interests of the organization first. As stewards, leaders
empower followers to make decisions and have control over how they do their own jobs. Four
principles provide the framework for stewardship:
• Adopt a partnership mindset. Partnership can happen only when power and control shift
away from formal leaders to core employees.
• Give decision-making power and the authority to act to those closest to the work and
the customer. This means reintegrating the “managing” and the “doing” of work, so that
everyone becomes a leader and is also doing some of the core work of the organization.
o Nobody gets paid simply to plan and manage the work of others.
• Tie rewards to contributions rather than formal positions. With stewardship, everyone’s
fortunes are connected to the success of the enterprise.
New Leader Action Memo: As a leader, you can apply the principles of stewardship and treat
followers as true partners by sharing power and authority for setting goals, making decisions,
and maintaining control over their own work and performance.
Stewardship leaders guide the organization without dominating it and facilitate followers
without controlling them. Stewardship gives followers a chance to use their minds, bodies,
and spirits on the job, thereby allowing them to be whole human beings.
D. The Servant Leader
Servant leadership takes stewardship assumptions about leaders and followers one step
New Leader Action Memo: As a leader, you can put the needs, interests, and goals of others
above your own and use your personal gifts to help others achieve their potential. The
Servant leadership was first described by Robert Greenleaf in his book, Servant Leadership.
There are four basic precepts in Greenleaf’s model:
• Put service before self-interest. In this view, the organization exists as much to provide
meaningful work to the person as the person exists to perform work for the
organization.
• Listen first to affirm others. One of the servant leader’s greatest gift to others is listening
authentically.
In the Lead: Adam Grant, Wharton School of the University of Pennsylvania
Adam Grant has been studying the power of service to others since he was an undergraduate
student at Harvard. He took a job selling advertisements for a travel guide series but didn’t do so
well. Only when he met another student and learned that her job at the same company was
Leaders care how employees feel about themselves, about their work, and about the people
they interact with. They instill a sense of dignity, responsibility, and meaningfulness in menial
tasks.
Discussion Question #6: Should serving others be placed at a higher moral level than serving
oneself? Discuss.
Notes_________________________________________________________________________
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Leadership Challenge #6: Recognize courage in others and unlock your own potential to live
and act courageously.
V. Leading with Courage
Leaders sometimes have to reach deep within themselves to find the courage and strength of
character to resist temptation, behave morally, or to stand up for ethical principles when others
A. What Is Courage?
Courage is both a moral and a practical matter for leaders. Courage is the mental and moral
strength to engage in, persevere through, and withstand danger, difficulty, or fear.
CONSIDER THIS: Is it Worth the Risk?
To laugh … is to risk appearing the fool.
To weep … is to risk appearing sentimental.
To reach out … is to risk involvement.
To expose feelings … is to risk exposing your true self.
But risks must be taken, because the greatest hazard in life is to risk nothing. Those who risk
nothing do nothing and have nothing.
Many times it isn’t fear as an actual threat that holds people back, but rather F.E.A.R., which
stands for False Evidence Appearing Real. This kind of “fear” arises not from a true threat but
from our own thoughts. This type of fear might be better termed anxiety.
Courage Means Accepting Responsibility
Leaders make a real difference in the world when they are willing to step up and take personal
Courage Often Means Nonconformity
Leadership courage means going against the grain, breaking traditions, reducing
boundaries, and initiating change. Leaders are willing to take risks for a larger, ethical
purpose, and they encourage others to do so.
In the Lead: Paula Reid, U.S. Secret Service
Prostitution is legal in Cartagena, Colombia, but when a U.S. Secret Service agent allegedly
refused to pay, it set off a scandal that got several agents fired and tarnished the agency’s
reputation. Paula Reid, the new supervising manager for the Miami office of the U.S. Secret
Most leaders initiating change find some cooperation and support, but they also encounter
resistance, rejection, loneliness, and even ridicule. It’s often easier to stay with what is
familiar, even if it will lead to certain failure, than to initiate bold change.
Courage Means Pushing Beyond the Comfort Zone
To take a chance and improve things means leaders have to push beyond their comfort
zone. When people go beyond the comfort zone, they encounter an invisible “wall of fear.”
Facing the invisible wall of fear is when courage is needed the most.
New Leader Action Memo: As a leader, you can develop the backbone to accept personal
Courage Means Asking for What You Want and Saying What You Think
Leaders have to speak out to influence others. The Abilene Paradox is the name Jerry
Harvey, author and scholar, uses to describe the tendency of people to not voice their true
thoughts because they want to please others.
New Leader Action Memo: You can assess your level of leadership courage by completing the
exercise in Leader’s Self-Insight 6.3.
Courage Means Fighting for What You Believe
Discussion Question #3: How might understanding the difference between “fear” and “F.E.A.R.,” as
described in the chapter, make you a better leader? Can you name an example from your own life of
“false evidence appearing real”?
Notes_________________________________________________________________________
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B. How Does Courage Apply to Moral Leadership?
There are many people working in organizations who have the courage to be unconventional,
Acting Like a Moral Leader Requires Personal Courage
To practice moral leadership, leaders have to know themselves, understand their strengths
Opposing Unethical Conduct Requires Courage
Whistleblowing means employee disclosure of illegal, immoral, or unethical practices in
the organization. It is highly risky for employees to blow the whistle because they may lose
their jobs, be ostracized by coworkers, or be transferred to undesirable positions. Most
In the Lead: Michael Woodford, Olympus
Michael Woodford had been with camera maker Olympus for 30 years when he was named
president and CEO in early 2011. That appointment turned out to be the end of his career
with the company as well.
Discussion Question #10: A consultant recently argued that the emphasis on corporate governance
and social responsibility has distracted leaders from key business issues such as serving customers and
beating competitors. Do you agree? Should leaders put business issues first or ethical issues first?
Notes_________________________________________________________________________
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C. Finding Personal Courage
All people have can live and act courageously. There are a number of ways leaders can unlock
New Leader Action Memo: As a leader, you can find your personal courage by committing to
something you deeply believe in. You can welcome potential failure as a means of growth and
development and build bonds of caring and mutual support with family, friends, and colleagues
to reduce fear.
Believing in a Higher Purpose
Draw Strength from Others
Caring about others and having their support is a source of courage in a topsy-turvy world.
Support for this proposition comes from studies of the civil right movement in the
Southern United States.
evidence that social media actually reduces strong ties (deep personal connections),
making it harder for people to express courage when they need it.
Harness Frustration and Anger
Anger, in moderate amounts, is a healthy emotion that provides energy to move forward.
The challenge is to harness anger and use it appropriately.
Take Small Steps
In most cases within organizations, finding courage is a deliberate act rather than an
instantaneous response. Courage can be thought of as a decision-making skill that is
Discussion Question #4: One finding is that when leaders are under stress so that fear and risk
increase, they tend to revert to an authoritarian, command-and-control style. As a leader, how
might you find the courage to resist this tendency?
Notes_________________________________________________________________________
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Discussion Questions
1. What are some pressures you face as a student that challenge your ability to do the right
thing? Do you expect to face more or fewer pressures as a leader? Discuss what some of
these pressures might be.
Students can share their experiences as students with the class. One challenge is that of
honesty in the age of internet courses. Because students work from home or office on
2. If most adults are at a conventional level of moral development, what does this mean for
their potential for moral leadership?
Adults who reach the conventional stage of moral development tend to conform to social
trends and follow what is defined by the collective society and individuals around them. In
this stage, if deceit and cheating are the norm, then these adults will follow the trend without
3. How might understanding the difference between “fear” and “F.E.A.R.,” as described in
the chapter, make you a better leader? Can you name an example from your own life of
“false evidence appearing real”?
Students’ answers will vary. F.E.A.R., which stands for “false evidence appearing real,”
arises not from a true threat but from people’s own thoughts. This type of fear might be
4. One finding is that when leaders are under stress so that fear and risk increase, they tend to
revert to an authoritarian, command-and-control style. As a leader, how might you find the
courage to resist this tendency?
Students’ answers will vary. Some of them may say that leaders under stress should remind
themselves that authoritarian management style gives no chance to the employees to voice
5. If you were in a position as a student similar to Mike McQueary at Pennsylvania State
University, what do you think you would do? Why?
Students’ answers will vary. Some students may feel McQueary was right in not reporting as
there are risks involved in whistleblowing. There may also be others who may say that it
6. Should serving others be placed at a higher moral level than serving oneself? Discuss.
Leaders who care for others more than they care for themselves tend to have dedicated and
loyal followers and are better known across the organization. According to the concept of
7. If it is immoral to prevent those around you from growing to their fullest potential, are you
being moral?
Preventing people around oneself from growing to their fullest potential is not a moral thing
to do. It is the moral responsibility of leaders to speak out to influence others. If there are
8. Leaders at several organizations, including Hostess Brands (Twinkies), Sbarro, and
Blockbuster, have gotten significant raises or bonuses shortly before the firms filed for
bankruptcy. The companies have argued that it was a necessary step to keep managers
during a difficult time. Do you think this is a legitimate argument from an ethical
standpoint? Discuss.
